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Labor Mobility and Income Tax Competition

  • Gwenael Piaser

    (CORE, Universtité catholique de Louvain)

This paper provides a model of nonlinear income taxation in a context of international mobility. We consider two identical countries, in which each government chooses non-cooperatively redistributive taxes. It is shown that when skilled workers can move at low cost, the income taxation does not involve distortions. When the cost to move becomes high for skilled workers, taxation policy is less redistributive but qualitatively similar to the taxation policy in autarky. Moreover, the mobility of the unskilled workers does not affect the income taxation when both countries have Rawlsian objectives.

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File URL: http://econwpa.repec.org/eps/pe/papers/0302/0302002.pdf
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Paper provided by EconWPA in its series Public Economics with number 0302002.

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Length: 26 pages
Date of creation: 04 Feb 2003
Date of revision:
Handle: RePEc:wpa:wuwppe:0302002
Note: Type of Document - Acrobat PDF; prepared on UNIX/BSD; to print on HP/PostScript/Franciscan monk; pages: 26; figures: included. 26 pages, PDF, prepared from dvips and ps2pdf - figures included
Contact details of provider: Web page: http://econwpa.repec.org

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  1. David Martimort & Lars Stole, 2002. "The Revelation and Delegation Principles in Common Agency Games," Econometrica, Econometric Society, vol. 70(4), pages 1659-1673, July.
  2. Gordon, Roger H, 1983. "An Optimal Taxation Approach to Fiscal Federalism," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 567-86, November.
  3. CREMER, Helmuth & FOURGEAUD, Virginie & LEITE-MONTEIRO, Manuel & MARCHAND, Maurice, . "Mobility and redistribution: A survey," CORE Discussion Papers RP -1371, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. repec:ebl:ecbull:v:8:y:2002:i:2:p:1-6 is not listed on IDEAS
  5. Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
  6. Rochet, Jean-Charles & Stole, Lars A, 2002. "Nonlinear Pricing with Random Participation," Review of Economic Studies, Wiley Blackwell, vol. 69(1), pages 277-311, January.
  7. Peters, Michael, 2001. "Common Agency and the Revelation Principle," Econometrica, Econometric Society, vol. 69(5), pages 1349-72, September.
  8. Joseph E. Stiglitz, 1981. "Self-Selection and Pareto Efficient Taxation," NBER Working Papers 0632, National Bureau of Economic Research, Inc.
  9. HAMILTON, Jonathan & PESTIEAU, Pierre, 2002. "Optimal income taxation and the ability distribution: implications for migration equilibria," CORE Discussion Papers 2002036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  11. Martimort, David, 1999. "Renegotiation Design with Multiple Regulators," Journal of Economic Theory, Elsevier, vol. 88(2), pages 261-293, October.
  12. Diamond, Peter A, 1998. "Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates," American Economic Review, American Economic Association, vol. 88(1), pages 83-95, March.
  13. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
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